The
efficacy of, what later was to be called, the "Cap and Trade" approach
to air pollution abatement was first demonstrated in a series of micro-economic
computer simulation studies between 1967 and 1970 for the National Air
Pollution Control Administration (predecessor to the EPA Air Office) by
Ellison Burton and William Sanjour. These studies used mathematical models
of several cities and their emission sources in order to compare the cost
and effectiveness of various control strategies.[5][6][7][8][9]For
each abatement strategy comparison was made with the "least cost solution"
produced by a computer optimization program which finds the least costly
combination of source reductions to achieve a given abatement goal.[10]
In each case it was found that the least cost solution was dramatically
less costly for the same level of pollution produced by any conventional
abatement strategy.[11] This led to the
concept of "Cap and Trade" as a means of achieving the "least cost solution"
for a given level of abatement.

5.
Burton, Ellison, and William Sanjour. (1967). An Economic Analysis of
the Control of Sulphur Oxides Air Pollution. DHEW Program Analysis
Report No. 1967-69. Washington, DC: Ernst and Ernst.

6.
Burton, Ellison, and William Sanjour. (1968). A Cost-Effectiveness Study
of Particulate and SOx Emission Control in the New York Metropolitan Area.
NTIS: PB-227 121/1. Contract Number: PH-86-68-37. Washington, DC: Ernst
and Ernst.

7.
Burton, Ellison, and William Sanjour. (1969). A Cost-Effectiveness Study
of Air Pollution Abatement in the Greater Kansas City Area. NTIS: PB-227
116/1. Washington, DC: Ernst and Ernst.